Australia adopts tax incentives for critical minerals

Australia's Parliament has passed laws to give production tax breaks on critical minerals and renewable hydrogen, in an effort to boost energy transition plans, as the country aims for net zero emissions and reduce its dependence on China by 2050.

The centre-left Labor Government said that the law passed on Tuesday will provide tax incentives of up to 10% for the processing and refining cost for 31 essential minerals for the fiscal years ending in June 2028 until 2040.

A tax incentive of A$2 (1.26 USD) per kilogram of renewable hydrogen will be provided.

In a recent statement, Resources Minister Madeleine King stated that "by processing more of these mineral here in Australia we will create jobs as well as diversify global supply chain."

The world's major economies are investing billions in critical mineral projects to compete with China, which is the largest producer of rare Earths.

Solar panels and batteries that reduce carbon emissions require rare earth minerals, as do submarines and aircraft.

Labor and the Greens blocked Labor's amendments, which would have required companies to conduct fewer consultations with Indigenous peoples or the environment.

In a press release, the opposition claimed that "Labor tax credits are accompanied by additional and unnecessary green and red tape."

The Anthony Albanese led Labor government wants to highlight the tax breaks available in certain electorates of the resource-rich Western Australia and Queensland states ahead of the May national election.

In its budget for May, the Australian government had promised to introduce tax incentives of A$7 billion to encourage the refining and processing of critical minerals as well as A$6.7 billion to promote renewable hydrogen production between 2028 and 2040. ($1 = 1.5886 Australian dollars)

(source: Reuters)